Tanzania's Foreign Business Ban and the Shadow of Idi Amin

Does banning foreign investors protect local entrepreneurs or shrink the economy? This policy, tried in many African nations, is now on the agenda in Tanzania. The Tanzanian government has banned foreigners from establishing businesses in 15 sectors, aiming to "protect the local population." However, history shows that such radical protectionist policies often produce the exact opposite of the intended results.

The regulation covers a broad range of areas, from mobile money transfers to beauty salons, and from tour guiding to souvenir shops, directly affecting over 50,000 small-scale foreign entrepreneurs.

The criminal penalties are severe: fines of up to ten million shillings ($4,000), up to six months in prison, visa revocation, and seizure of business assets. Not only foreigners, but Tanzanians who assist them also face fines of five million shillings and three months imprisonment.

While existing businesses are permitted to operate until their licenses expire, all licenses will be suspended upon expiry. This means foreign entrepreneurs in the country may be forced to completely withdraw from Tanzania in the long term.

It is believed that President Samia Suluhu Hassan made this move ahead of the upcoming general elections to gain the support of local businesses and garner votes with an 'anti-foreigner' populist rhetoric.

Protectionism or Economic Risk?

The government presents this step as a "protective" move taken to economically empower Tanzanians. At the heart of the debate are small-scale Chinese businesses, particularly active in retail, services, and manufacturing, who compete directly with local SMEs. The low-price business models and practices often contrary to local norms (bribery, corruption, etc.) brought by these businesses have created significant pressure on Tanzanian traders. Therefore, this move is also interpreted as a signal of the Dar es Salaam administration's quest for a more balanced stance in its relations with Beijing, within the context of the economic and political tensions caused by China's widespread investments on the continent.

However, history shows that decisions excluding foreign businesses and labour are mostly taken as a result of pre-existing deep economic crises and governance weaknesses, and end up fueling the existing fire rather than extinguishing it.

Tanzania's move escalates into a larger problem by targeting not only Chinese businesses but also tens of thousands of African workers and small business owners from Kenya, Rwanda, Burundi, South Sudan, and the Congo. Considering that over 40,000 Kenyans are estimated to live and work in Tanzania, the human and economic impact of the decision cannot be ignored.

This transforms the decision from a simple matter of domestic policy into a blow to regional cooperation. The aim of the East African Community (EAC), of which Tanzania is a founding member, is to ensure the free movement of capital, goods, services, and labour among member states. Tanzania's move directly contradicts the community's fundamental principle and inevitably brings the risk of retaliation and trade tensions.

Furthermore, the bureaucracy involved in monitoring, supervising, and potentially sanctioning 50,000 businesses could pave the way for a deepening of the corruption the country has long struggled with.

While experts in the region acknowledge that the ban might offer short-term political gains for the Tanzanian government, they warn that in the long term, it creates an economic bottleneck for the country and a dangerous precedent for the region.

The Economic Cost of Xenophobia in Africa

In African history, most bans targeting foreign labour were introduced with the claim of fighting unemployment and protecting the local population. But the results were usually the opposite:

• Ghana: In 1969, facing serious economic difficulties and high unemployment, the government deported hundreds of thousands of West African migrants, mostly Nigerians, claiming "foreign workers were taking jobs from Ghanaians." This reactive move immediately disrupted vibrant commercial life, inflicting a deep wound on the economy.
• Nigeria: In 1983, it expelled approximately 2 million (mostly illegal) Ghanaians from the country, labelling them "foreign labour." The event's mark on collective memory is so deep that the cheap nylon bags used by Ghanaians forced to leave the country in destitution became known as "Ghana must go" bags, a symbolic term that persists to this day.

In both examples, the presence of foreigners was presented as the main cause of the worsening economy. However, after the foreigners left, unemployment did not decrease; on the contrary, the economy became more fragile, some crafts disappeared, the labour force diminished, and a cycle of hatred and retaliation against foreigners was triggered.

Idi Amin's Economic Suicide: The Collapse of a Nation in 90 Days

The harshest, most tragic, and most remembered example of such bans was undoubtedly the 1972 decision by Ugandan leader Idi Amin to "expel the Asians."

Idi Amin gave Asians in the country just 90 days to leave Uganda. He cited claims that they "sabotaged the economy, delayed development, and failed to integrate into the Ugandan way of life."

The Asian community, constituting a small part of Uganda's population but responsible for 90% of tax revenue, was the backbone of the country's trade, finance sectors, and small businesses.

When the Asians left Uganda, its people found themselves in a major crisis shortly after. Economists believe this decision set the country's economy back a decade. The populace, inexperienced in most sectors, could not maintain existing business connections. Small businesses collapsed, many crafts were lost, unemployment rose, and state revenues fell significantly. The Ugandan shilling depreciated, and the country's international reputation was tarnished.

Approximately 80,000 Asians forced to leave Uganda struggled to rebuild their lives in various countries, primarily the UK and Canada. Assessments years later revealed that this population contributed economically to the countries they went to, while for Uganda, it represented an irreparable brain drain and loss.

Building Rules, Not Walls

Tanzania's move and Idi Amin's 1972 action are, of course, incomparable in terms of nature and severity. Amin's decision was an inhumane and sudden act of violence. Tanzania aims (for now) to restrict foreign entry into certain sectors through a legal regulation. However, the common point between the two situations is the reactive and exclusionary method adopted in the face of economic difficulties.

While it is possible to understand the legitimate economic concerns behind the decision, history shows that such reactive protectionism, which is not inclusive, often spirals out of control and harms everyone, local or foreign. The real problem is not the presence of foreigners, but the fact that this presence continues in an irregular, unregulated form that is not integrated into the local economy.

Tanzania must not fall into the misconception that the national economy can be strengthened by excluding those from outside. Both the example of Idi Amin's Uganda and those of Ghana and Nigeria showed that this misconception not only resulted in economic damage but also led to regional tensions and damaged international relations.

Tanzania faces two choices: It will either steer foreign investment towards its own development goals through smart regulations mandating local partnerships, local employment quotas, transparent tax audits, and knowledge/experience transfer; or it will allow history to repeat itself with a populist ban reflex, facing the risk of long-term economic deadlock for the sake of short-term political gain. It must be remembered that with this decision, Tanzania will shape not only its own future but also the integration ideal of East Africa.

Originally published in Independent Türkçe, on September 17,2025.